Salesforce (NYSE:CRM)
After reporting its earnings for the second quarter, shareholders of Salesforce (NYSE:CRM) saw their stock price drop by 6.4% as of 11:38 a.m. Eastern Time on Thursday. The stock has lost 33% of its value so far this year.
A revenue increase that was in line with previous patterns was recorded by the customer relationship management platform that ranks first. However, the company provided guidance lower than investors had anticipated, which may have been a factor in today’s stock performance.
Then what?
The figures during the second quarter were quite strong. The increase in revenue was 26% from the previous year when adjusted for inflation. This is in line with the growth level that Salesforce (NYSE:CRM) reported over the previous decade, but investors noticed some warning indications that a slowdown in the company’s growth was on the horizon.
The increase in the corporation’s remaining performance obligations (RPO) indicates that demand for the company’s cloud-based software platform has declined. This indicator represents the value of the contracts that have been awarded to the company but have not yet been fulfilled. The RPO climbed at a rate of 21% year over year during the first quarter, but the rate slowed down to 15% during the second quarter.
What’s Next?
Salesforce (NYSE:CRM) customers are cautious about the short-term trajectory of the economy, as evidenced by the company’s observations. This is reflected in the company’s forecast, which states that management anticipates that year-over-year revenue growth for the third quarter will slow down to 18% on a constant-currency basis.
The lower guidance that Salesforce (NYSE:CRM) provided shouldn’t cause investors any concern. Although the stock may continue to trade at a loss soon, many businesses view the transition to digital services as a top investment priority. This leading software-as-a-service company’s stock shouldn’t have its long-term investment thesis altered, even if growth has a temporary setback.
Featured Image: Megapixl @Andreistanescu
Author Shariq Khan 
